CGLD and Peter Lynch
CL,
Your investment choice of CGLD and cogent commentary is a chief reason why I find this three or four day dip in the share price of CGLD easy to shrug off.
I loved your Peter Lynch quote:
"One thing that's always worked for me was Peter Lynch's advice: Do a lot of DD, buy undervalued stocks and then wait for the market to find it. He also said he made the big profits in the third and fourth years of holding them. Not many individuals have that kind of patience, but that's the way you get big moves." -- C L.
Three or four years! Would that I had a small fraction of such patience.
I remember how pleased I was when I checked on CGLD this past Monday and found it had upticked to .75 -- now that's to be regarded as a big disappointment? HAHA! Not so.
Taking a look around the publicly traded gold companies shows just what sort of undervalued gem we're holding here:
I give you for examples,
1) RGLD, Royal Gold: Net income per share, 78 cents; RGLD share Price $30.
Given a board consensus conservative EPS estimate for CGLD of 8 cents for the current four quarters, we can divide RGLD's $30 share price by 10 and we get -- $3.
2) EGO, El Dorado Gold: Net income per share, .14; EGO share price: $6.23. Dividing EGO's share price in half (yeah I know that would make EPS only 7 cents, but it's easier) and get -- $3.12
3) GSS, Golden Star Resources: Net income per share, .12: GSS share price, $3.49. Take away one third of that EPS, (to make it equivalent of .08) and reduce the share price a corresdponding one third, you get -- $2.30.
4) GFI: Goldfields (this one I had a tough time getting my head around, in general, because they generate $3 billion (!) a year in gold revenue, and have $220M cash on hand, but $1.5 billion in debt -- staggering numbers all but here's the key comparison stat for us again --) Net income per share .59 cents. GFI share price, $18.93. Divided by 7.5 to give us the equivalent of 8 cents per share net income gets you -- approx $2.50.
5) NXG, Northgate Minerals, net income per share, .22. NXG share price, $3.47. (NXG has a VERY attractive chart right now, by the way. It, too, looks undervalued at this point, with a forward looking PE of 8. AND YET --) Dividing NXG's share price by 3, we get $1.15!
In closing, I'll just repeat what I stated in a previous post on the Yahoo Finance chat board: If you have sold, or do sell, CGLD here, anywhere under $1. YOU'VE BEEN PLAYED.
